Struggling German budget carrier airberlin has filed for insolvency in a Berlin court and loss-making shareholder Etihad says it will not be providing further financial support.
Germany’s second biggest carrier and its Niki subsidiary will continue to fly and rival Lufthansa said it was in negotiations to take over parts of the group.
The German government is also supporting a 150 million euro transitional loan to allow flights to continue and described talks with Lufthansa as advanced.
Germany’s Bild newspaper reported airberlin filed after Etihad, which bought its stake in 2011, notified it on Friday it would no longer provide financial support.
The Abu Dhabi carrier has problems of its own and recently reported a $US1.87 billion loss that included an $US808m write-off mainly related to investments in airberlin and failed carrier Alitalia, also in administration after unions rejected a restructuring deal.
Read: Etihad makes massive $US1.87m loss.
Both investments were made under previous chief executive James Hogan as part of a strategy to expand Etihad’s global footprint.
Etihad on Tuesday confirmed it had been informed about airberlin’s administration and described the development as “extremely disappointing”.
“In April this year, Etihad provided EUR 250 million of additional funding to airberlin as well as supporting the airline to explore strategic options for the business,’’ Etihad said in a statement.
“However, airberlin’s business has deteriorated at an unprecedented pace, preventing it from overcoming its significant challenges and from implementing alternative strategic solutions.
“Under these circumstances, as a minority shareholder, Etihad cannot offer funding that would further increase our financial exposure. We remain open to helping find a commercially viable solution for all parties.’’
Etihad said it expected airberlin operations to continue during administration and it would continue to support management.
The German budget carrier reported a 782m euro net loss in the 2016 financial year after a 446m euro loss the previous year.
